Living in Castronno and working in Ticino as a border worker (cross-border guide)

Context

In a nutshell

• The new Frontier Agreement is in force from 1 January 2024.
• Exclusive taxation in Switzerland with tax credit in Italy.
• Exemption of 7,500 euros for old border workers until 2033.
• Deductible of 10,000 euros for new frontier workers hired from 2024.

Key facts

• What: New Italy-Switzerland Tax Agreement
• When: Effective January 1, 2024
• Where: Canton of Ticino and Italian border territory
• Who: Federal Tax Administration (FTA) and Revenue Agency
• Amount: Deductible 10,000 euros for new frontier workers
• Contribution: AVS/AI/IPG 5.3% to be paid by the employee

Moving or residing in Castronno to work in Ticino requires a clear understanding of recent regulatory evolutions regulating the cross-border labour market. The regulatory reference point is the new Frontier Agreement, signed on 23 December 2020 and fully operational from 1 January 2024, following the Italian ratification of Law 83 of 13 June 2023. This legislation has profoundly modified the taxation regime for those who live in Italy and serve in the Canton of Ticino. Unlike in the past, where there were different systems, today the border is subject to a tax at source operated exclusively in Switzerland. Italy, to avoid double taxation, allows the worker to deduct taxes paid in Swiss territory through the tax credit, to be declared

Operational details

Pension management and taxation

The choice to reside in Castronno, involving the status of border worker, requires careful management of one's contributory position. Italy, under the Double Taxation Convention signed on 9 December 1976, does not consider Switzerland to be a member of the European Union or the European Economic Area (EEA). This means that the worker must be particularly scrupulous in filling out the Italian tax return. The Italian personal income tax rates applied to income received in Switzerland, once the tax credit for taxes paid to the AFC has been deducted, follow the current brackets: 23% up to 28,000 euros, 35% for the portion between 28,001 and 50,000 euros, and 43% for the part exceeding 50,000 euros. Accurate payroll netting is an essential step for family budget planners. Using a dedicated calcolatore allows you to simulate the real impact of these withholdings on monthly income.

An often underestimated aspect is the right of option for health insurance. As a G border worker, the worker has the right to choose whether to subscribe to the LAMal or maintain health coverage in Italy. It is important to clarify that this is not a tax, but a mandatory insurance coverage. Adult deductibles range from CHF 300 to CHF 2,500 depending on your choice. For those who move daily from Castronno to the passes

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

Operations and bureaucratic procedures

For those living in Castronno, the procedure to formalize the cross-border worker status begins with obtaining the G permit, issued by the cantonal authorities in collaboration with the SEM (State Secretariat for Migration). It is necessary to keep track of every document related to payments made in Switzerland. Retaining documentation, including salary certificates and receipts of contributions paid (such as AVS, LPP, and LAINF), is essential for the correct management of the 730 tax return in Italy. Italian legislation, specifically the TUIR (DPR 917/1986), defines the taxation methods for work performed abroad. Please note that the tax credit is not automatic but must be correctly indicated by the taxpayer in the tax return. Consulting a tax expert or using tax declaration tools is recommended to ensure the correct application of the entitled deduction.

…